USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The recent US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent Fedspeak has been leaning on the hawkish side, but the inflation and labour market reports before the next meeting will decide whether they will indeed hike or not.
- The market doesn’t expect the Fed to hike anymore.
EUR
- The ECB left interest rates unchanged as expected as the central bank has ended its tightening cycle.
- President Lagarde highlighted the weakness in the Eurozone economy and reaffirmed that rates will make a substantial contribution to curbing inflation.
- The recent Eurozone CPI missed expectations on the headline figures but the Core measure remained unchanged. This is unlikely to change the ECB’s stance anyway.
- The labour market remains historically tight but the unemployment rate recently ticked higher.
- The recent Eurozone PMIs missed across the board as the economy continues to struggle.
- The market doesn’t expect the ECB to hike anymore.
EURUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that EURUSD got rejected from the resistance around the 1.0760 where we have also the 38.2% Fibonacci retracement level for confluence. The pair maintains the bullish bias as the price continues to print higher highs and higher lows with the moving averages being crossed to the upside. The buyers will need to break above the resistance to start targeting the 1.0950 level.
EURUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is consolidating in a descending triangle pattern defined by the support zone around the 1.0660 level and the counter-trendline. If we see a break above the trendline, the buyers should increase the bullish bets into the resistance. On the other hand, if we see a break to the downside, the sellers are likely to pile in with more conviction to target the lows around the 1.05 handle.
EURUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the price action around the trendline of the triangle. The price has been forming what looks like a bullish flag right at the counter-trendline. This might be a sign that we could see a more sustained move to the upside. The first target for the rally should be the swing high at the 1.0725 level, with an extension into the 1.0760 level being likely upon further breakout.
Upcoming Events
This week we have some top tier economic releases. We begin today with the US CPI report which might be one of the most important events of the week. Tomorrow, we have the US Retail Sales and PPI data, while on Thursday we conclude with the latest US Jobless Claims figures.
See the video below
